1. REASONS OF FAMILY BUSINESS’ FAILURES

2. Family Business ‘‘ Give him a living, but never discuss the Family business with him." Don Vito Corleone to Tom

3. Outline What is the importance of family businesses? Why do family businesses fail? What are the main reasons?

4. Family Businesses According to researches; 65-80% of businesses around the world are family business.

5. Family Businesses

6. Surviving Through Generation

7. Why do businesses fail? Poor management Insufficient Capital Location Overexpansion …

8. Family Business’ Failures Family business failures were not often the result of market or macro enviromental forces. Family business’ failure reasons generally occurs from family and management issues.

9. Young Members’ Behaviors Dont change their behaviors (during transition period) Disagree with new rules Parents try to take control Restrain young members’ activities

10. Old Members’ Behaviors Parents can not recognize that second or third generation members are old enough Parents do not show any respect and they fail to pass authority Parents do not want to be out of game Parents see their children as their competitors

11. Deciding who will be involved in family business If more than one candidate, parents have to choose right family member for right position. They have to decide who will be in, who will be out. Parents force children to involve in family business. They do not pay attention what their children want to do

12. Employing Children Employing children according to sex and age status Oldest son for most important and critical position Daughter for basic or not so important position Ignoring abilities and management skills

13. Keep Family in Peace Ignoring children fails Being away from arguing important cases about family

14. Communicating or Solving Problems via Third Parties Damages relationships between family members

15. Fraternal Fightings and Estate Conflicts In 2003, twenty biggest and famous Turkish family businesses were failed. According to researches, the biggest two reasons were fraternal fightings(%43) and estate conflicts(%19). Conflicts between family members in and out of the business and with non-family members

16. Institutionalization (getting a corporate identity) First generation or the founder generally becomes disagree with institutionalization They do not want to loose control They do not want to see external people in company

17. Lack of Succession Planning Next generation lacks essantial skills, experience Next generation have not been well prepared for job

18. Unfair Promote or Assignment Makes other employees disappointed Decreases their willingness Ignoring experience, skills, abilities, and education Damages corporate identity

19. References http://www.milliyet.com/2004/05/13/isyasami /ais.html http://www.milliyet.com/2004/05/13/isyasami /ais.html http://capital.com.tr/haber.aspx?HBR_KOD=4 454 http://capital.com.tr/haber.aspx?HBR_KOD=4 454 http://www.haber3.com/haber.php?haber_id =232028 http://www.haber3.com/haber.php?haber_id =232028 http://view.fdu.edu/default.aspx?id=2337

20. References http://blog.tootoo.com/en/ninetown/post/688 http://www.tuta.hut.fi/studies/Courses_and_s chedules/Isib/TU- 91.148/Family_Business_Rulebook.pdf.com http://www.tuta.hut.fi/studies/Courses_and_s chedules/Isib/TU- 91.148/Family_Business_Rulebook.pdf.com http://www.enetrust.com/Communications/Pr essReleases/PressReleases2004/2004_09_16. asp http://www.enetrust.com/Communications/Pr essReleases/PressReleases2004/2004_09_16. asp http://www.robbinex.com/family.shtml

21. References http://www.trinvest.com/nshow.php?ne wsId=514&pageId=7&categoryId=45 http://www.trinvest.com/nshow.php?ne wsId=514&pageId=7&categoryId=45 http://boston.bizjournals.com/boston/st ories/2002/09/16/smallb3.html http://boston.bizjournals.com/boston/st ories/2002/09/16/smallb3.html http://www.forbesconferences.com/?pa ge=event&eventID=107 http://www.forbesconferences.com/?pa ge=event&eventID=107

22. References Arguden, Yılmaz (2002). Aile Şirketlerinde Kuşak Değişimi http://www.kobitek.com/makale.php?id= 122 Lea, James (2004). Planning could avoid many family business failures http://www.bizjournals.com/triad/stories/ 2004/05/17/smallb3.html